If You Haven't Seen A Windows Phone Lately, It's Because They're Practically Disappearing

Mark Rogowsky
, ContributorI write about technology, trends and companies on the leading edge.Opinions expressed by Forbes Contributors are their own.

Neither
Microsoft nor
Nokia can hide from the very, very ugly truth. Windows Phone is failing miserably to gain any important traction despite tremendous marketing support. It's true that globally, Nokia's Lumia line set a record with 7.4 million units sold in the quarter. But those numbers mask the grim reality. First, North American sales actually fell to just 500,000 units. Second, average selling prices actually fell almost 20% from the prior quarter. To boost sales, Nokia has become a low-end smartphone maker.

The two companies sit at a crossroads. Microsoft is paying Nokia $250 million a quarter to lose money pushing inexpensive Windows phones. The platform is picking up marginal share, but quite literally none of it is at the high end. If rumors about a lower cost iPhone from
Apple prove true, even those gains are likely to prove short-lived. But more significantly, Windows Phone is on the verge of disappearing in the United States and parts of Western Europe, where most mobile-app development is centered. In theory, developers will write for a platform if the numbers exist somewhere. In reality, developers work on what they see and live with. That's why Apple's roughly 40% U.S. share keeps iOS app development so robust even though Android dominates globally.

More importantly, though, there isn't evidence that the low end of Android is building an important business for anyone. No one is making profit down there and what's driving Android is really Samsung at the middle and top.
Google seems obsessed with using the Motorola division to take back some of that middle from the Korean giant, but not the bottom tier. And the reason should be evident. People looking for the lowest phone price are least likely to be big app and data customers.

Microsoft has to decide if it wants to follow Google down the path of making its own phones and investing a fortune in marketing them, as Google is rumored to be doing. Truthfully, it'd be better off finally coming to grips with the fact that it shouldn't bother. But either way, the status quo isn't working.

Nor is it for Nokia, which is essentially profitless across all divisions of the company. A reasonably strong balance sheet means the company faces no short-term threat of bankruptcy, but it has no long-term plan either. Even if unit sales grow for sub $200 (unsubsidized) Lumias, profits are very unlikely to follow. If Microsoft decides to bypass Nokia, even that avenue gets shut down. Becoming yet another Android phone maker might have been interesting two years ago, but it isn't now. Nokia and Microsoft both bet on each other and the bet appears to have gone sideways.